Downey Savings

Dud? Joined: 29 May 2008 Posts: 8 Location: California

Do you know anything about Downey Savings?

Posted: Fri May 30, 2008 10:51 pm

Downey has been posted to the Ailing/Watch List:

http://ml-implode.com/ailing/l.....05-31.html

Links have been provided to all the lawsuits we could find.

Posted: Sat May 31, 2008 4:50 am

Littletootall wrote:

Do you know anything about Downey Savings?

http://implode-explode.com/for.....php?t=2713

http://implode-explode.com/for.....php?t=2726

http://implode-explode.com/for.....php?t=2429

http://implode-explode.com/for.....php?t=2999

http://implode-explode.com/for.....php?t=1855

http://implode-explode.com/for.....php?t=1648

http://implode-explode.com/for.....php?t=1526

http://implode-explode.com/for......php?t=941

http://implode-explode.com/for......php?t=482

Posted: Sat May 31, 2008 6:31 am

An anecdote to DTM's post - there is a "Search" feature for the forums...

Ask and you shall receive (sometimes more than u asked for). Smile

C-4 Joined: 08 Nov 2007 Posts: 1290

Not much. I used to send my prime customers that wanted option arms to them before everyone else jumped in the game. They were kind of a pain in the bEhind. This was probably 99 or 2000 or so. Other than that the only thing I know is that they have some of the ugliest and cheapest looking branches in socal. Surprised they have not gone c&d or written agreement yet.

thats probably not what you were looking for.

Posted: Sun Jun 01, 2008 6:37 pm

As you can see from prior threads, Downey is the worst of the worst. They made loans toxic loans with little to no underwriting, and paid high premiums to mortgage brokers for delivering loans with excessive margins and prepayment penalties.

According to the 2007 Annual Report, which I highly recommend that anybody interested in Downey read, 82% of the loans in their portfolio were underwritten using stated income documentation, and another 7% were underwritten using stated income and stated asset documentation for a total of 89% of their portfolio that have not underwritten or verified borrower capacity. 44% percent of their portfolio was originated during the last two years, and 89% of the loans in their portfolio at the end of 2007 were located in California. See page 51 of report (page 58 of PDF) and page 49 (page 56 of PDF):

http://www.downeysavings.com/c.....report.pdf

Considering that 28% of their loan interest income was via negative amortization, the income reported for 2007 appears to be artificially inflated with negative amortization which is likely not collectable. Furthermore, due to their lack of government product offering, and their focus on ARMS and negative amortization products, their loan production and income has dropped substantially.

Hence, the company has declining income, and increasing liabilities from loan losses, as well as increased administrative costs from loss mitigation and foreclosure activities. If Downey was a mortgage company, they would have been out of business in early 2007 from the repurchase liability and loss of loan origination revenue alone. However, deposits have been declining, and the depositors and shareholders will not tolerate mismanagement much longer.

Posted: Sun Jun 01, 2008 7:15 pm

Do_the_Math: Spot on!

Great post... Do_the_Math somehow knows Downey perfectly... What more can be said.... might as well lock the thread.

End of story.

Dud? Joined: 29 May 2008 Posts: 8 Location: California

Now that Downey is on the watch wat is your estimated time line before they implode Question

Nitroglycerin Joined: 17 Oct 2007 Posts: 801

LMAO.

DTM - I find it amusing that Downey had loose underwriting standards (I know they did) but from an appraisers' perspective they were also the worst of the worst to deal with.

If you gave them three comps within 6 months, blocks of the subject, similar style and utility you ALWAYS got a request for an additional 1 or 2 comps "within 6 months, similar sq. ft., similar bedroom and bath count and similar utility".

Give them 4 up front - same thing. 5, same thing.

I used to refer to it as quantity not quality underwriting.

Posted: Mon Jun 02, 2008 1:32 pm

themaskedappraiser wrote:

LMAO.

DTM - I find it amusing that Downey had loose underwriting standards (I know they did) but from an appraisers' perspective they were also the worst of the worst to deal with.

If you gave them three comps within 6 months, blocks of the subject, similar style and utility you ALWAYS got a request for an additional 1 or 2 comps "within 6 months, similar sq. ft., similar bedroom and bath count and similar utility".

Give them 4 up front - same thing. 5, same thing.

I used to refer to it as quantity not quality underwriting.

Which makes you wonder why they did away with their approved appraiser list and streamlined the review process last summer when the market was declining and they were reaching for business.

Excerpt from email April 25, 2007:

Quote:

Appraisal Guidelines have Changed!!!

In an effort to help you partner with Downey Savings, we have done away with our “Approved Appraiser List” for all portfolio and conforming fixed rate loans. While other lenders are tightening their guidelines, Downey Savings is taking great strides to ease the loan process and give you a lender that you can team up with for all your future business. To decrease the need for an appraisal review, please be sure that your appraisal is done in a professional manner and pay close attention to the following areas:

ü Lack of comment regarding prior twelve-month listing history for subject property
ü Subject value or age outside neighborhood price/age range with no explanation
ü Additions/conversions or multiple kitchens with no comment regarding legality (building permit) or code compliance
ü Deferred maintenance or below average condition rating (check photos)
ü Comparable’s located in excess of one mile with no comment or justification
ü Lack of dual date verification to include MLS (Use of MLS is VERY Important)
ü Comparable’s dates if sale over 6 months
ü No presentation of pending sale or active listing comps
ü Lack of comment regarding prior three-year sales history for subject property

You sum it up nicely with the quantity vs. quality comment.